Understanding the Medicare Late Enrollment Penalty

When learning about enrollment, it’s important to keep a few key things in mind when it comes to rules and risks. Learn how to avoid these fees and make the Medicare experience as seamless and pain-free as possible.

Medicare Part A Penalty

The penalty for Part A is 10% of the current Part A premium. This will be paid for twice the number of years eligible for Part A but not enrolled. Most people are entitled to Part A for free for paying the Medicare tax while still working. If no employment history or not enough working history (based on credits), out-of-pocket premiums will be applied.

Medicare Part B Penalty

The penalty for Part B is a 10% increase on the Part B premium for each full 12-month period not enrolled but eligible. This is a lifelong penalty. If eligible for a Special Enrollment Period – enrolled in employer coverage, this penalty can be avoided.

Medicare Part D Penalty

The late penalty for Part D is 1% of the average monthly prescription drug premium (1% of $30 in 2020) times the number of months late, rounded to the nearest 10 cents. The penalty is generally enacted if not enrolled within 3 months of Medicare Part A or Part B. This penalty is permanent – must be paid while enrolled in Prescription Drug Coverage.

The enrollment periods and premium penalties are the same whether you are entitled to Medicare Part A or can voluntarily buy Medicare Part A.

You may not have to pay the penalty if you had health insurance through your job or your spouse’s job when you were first eligible to sign up for Medicare Part B.

Additional Medicare Part D Info

If eligible for the Extra Help with costs or a Special Enrollment Period (SEP) due to credible drug coverage, late enrollment penalties are not applied. Examples of creditable coverage include:

  • Coverage through job or spouse’s job, OR

  • Retiree coverage, OR

  • Coverage through the Veterans Administration.

The penalty premium is added to the regular premium that you pay to your Medicare drug plan.

In 2020, the average monthly prescription drug premium is $30. Therefore, the penalty fee will be calculated as 1% of $30, times the number of months late enrolling in Part D. If 12 months late in enrolling, the penalty would be $3.60, paid on top of the drug plan’s monthly premium. This amount may go up each year enrolled in a Part D plan.

Related Content

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A Guide to Enrolling in Medicare Part D
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